Patience and Ultimatum in Bargaining
This study investigates in a two-stage two-player model how the decision to make an ultimatum and how much to demand depends on the impatience of the agents and the pie uncertainty. First, players simultaneously decide on their ultimatums. If the ultimatum(s) are compatible then the player(s) receive his (their) demand(s) in the second period and the eventually remaining player becomes residual claimant. If no ultimatums are made then there is a Rubinstein-Ståhl bargaining. Relative impatience induces ultimatums but does not affect the demanded amount. In a discrete (continuous) setting there exist no equilibrium without an ultimatum (with mutual ultimatums).
|Date of creation:||12 Sep 2001|
|Date of revision:|
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- Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-37, May.
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- Muthoo, Abhinay, 1996. "A Bargaining Model Based on the Commitment Tactic," Journal of Economic Theory, Elsevier, vol. 69(1), pages 134-152, April.
- Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
- Harold Houba & Wilko Bolt, 1997. "Strategic bargaining in the variable threat game," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 57-77.
- Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, December.
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